Goods and Service Tax: End of Federalism and Power Transfer to Corporate-Hindutva State - PJ James

IN MID-2015 when the Modi regime set out to unleash its all-out offensive to super-impose Goods and Services Tax (GST), the biggest post-war tax reform over India, in an article entitled “GST as Corporate Class Assault on the People” (Red Star, July, 2015) we have unequivocally exposed the corporate-neoliberal agenda behind it. Now with the rolling out of GST with effect from 2017 June30-July1 midnight Special Session in the Central Hall of Indian Parliament, the Modi government at the behest of neocolonial-neoliberal centres has succeeded in accomplishing that task, ingeniously consolidating country’s economic sovereignty in the centralized corporate Hindutva regime and in the process undermining country’s federal structure, one of the salient features ingrained in the Indian Constitution by Dr. Ambedkar, its architect. This corporate onslaught is going to devastate the vast majority and in continuation of the fascistic demonetization drive, the fate of the people now is like falling from the prying pan to the burning fire. The GST is expected to change everything that involves a monetary transaction in the country.

It has been an eighteen-year-long journey since the concept of VAT, the forerunner of GST was conceived in 1999 when Atal Bihari Vajpayee was heading the NDA government. Ironically, Asim Das Gupta, CPI (M) leader and West Bengal finance minister was appointed as the chairman of the Empowered Committee coordinating the task of implementing the same in India. Formal discussion in India on GST which in the broader sense is an extension of VAT to services started in 2005. In brief, GST aims at the superimposition of a unified market in India on the one hand, and its unhindered integration with the international market on the other. To be precise, GST is an effective weapon speeding up neoliberal corporatization facilitating pan Indian movement of capital and commodities in the country eliminating all interstate hindrances on the one hand, and merger of Indian economy with globalised market on the other.

During the UPA regime, the Empowered Committee led by Dasgupta, even started preparing a roadmap for the introduction of GST by designing a GST model appropriate to India with effect from April 1, 2010. However, the attempt could not be materialized on account of strong opposition from BJP-led state governments most notably from Modi as Gujarat chief minister even as CPI (M) kept a low profile as its own finance minister was leading the GST panel. However, the ascendancy of ultra-rightist, pro-corporate BJP regime led by Modi, whose pro-people postures in the election campaign were popular ‘election stunts‘ have imparted new-found enthusiasm to the corporate-bureaucratic GST lobby in India. Today the corporate monopoly sections here along with their international counterparts uphold GST as one of the “big bang” neoliberal reforms, at par with the notorious demonetization. Here to reiterate, the salient features of GST are:

GST is the biggest post-war global indirect tax reform aimed at reducing the tax on the corporate super-rich and shifting maximum tax burden to the shoulders of common people. It is designed by imperialist think-tanks as a corporate weapon against the vast majority of toiling sections. As an IT-based comprehensive, highly regressive indirect tax, GST is having the advantage of being difficult to evade. Under neo-liberalism, the global trend is towards reduction in taxes on capital gains and financial wealth of the super-rich and GST is an ideal indirect tax for mobilizing revenue by putting the entire tax burden on the common people who are bound to spend almost all their income on current consumption. Its outcome will be further erosion in the purchasing power of the people and wide disparities in income and wealth. GST demolishes country’s federal structure by depriving the state governments of their constitutional power to levy taxes within the states. The new tax authority is the GST Council and the GSTN which are not answerable to the parliament but firmly under the grip of corporate financiers and new generation banks. The very process of state governments’ budget-making itself has become irrelevant. The state governments will have to depend on the magnanimity of the Centre and the plight of local self-governments will be more pathetic. The much trumpeted 73rd and 74th constitutional amendments extending vast resource mobilization powers to local bodies have become totally irrelevant with the GST offensive. Revealingly, even after more than 250 years of its existence the US still do not have a pan-American indirect tax system and in accordance with the requirements of federalism, all the indirect taxes on goods and services there are totally vested with the states. While US corporate CEOs and comprador Indian ideologues eulogize Modi for streamlining GST in India, it is ironical that the US does not have unified indirect tax system like the GST. The immediate repercussion of the super-imposed GST is an upward spiral in the prices of all essential items of mass consumption. A quarter century of globalization in India has already resulted in an end to government’s market intervention and price control strategies. Today the power to fix prices of goods and services is vested in monopoly market controlled by MNCs and corporate giants. In this context, even if the GST rates become less than the average of the previous indirect tax rates, tax burden on the people will be heavier as GST is imposed on the prices decided by monopoly market forces. As the experience of more than 150 countries which have already moved to GST shows, India is bound to go through unprecedented inflation even as corporate profits are galloping. More than 95 percent of the Indian workforce is in the unorganized and informal sector. Including this, the Small and Medium Enterprises (SMEs) and innumerable self-employment avenues that provide sustenance and employment to people and produce more than half of India’s manufactured output and contribute a quarter of India’s export revenue. These sectors are surviving solely due to several tax exemptions and price support and protective measures extended by central and state governments. Since GST is a unified tax structure and the same rate will be applicable to all these enterprises will be forced to compete with the corporate entities at the same unified GST rate. Same is the case with tens of millions of people depending on retail trade as corporate retailers backed by a nation-wide unified GST rate can easily exercise their control over everything from production to final consumption. Collapse of industry and agriculture, growth in unemployment, inflation arising from corporate-enforced rise in the price of goods and services, inequality, deprivation of the workers, peasants, small retailers and the millions of self-employed people and so on are the emerging trends in the country. Like demonetization which has been later proved as a “guinea-pig project” imposed over India by around 35 international organizations led by the USAID, the GST also is the brainchild of imperialist think-tanks. It was designed in India as part of the neoliberal corporate offensive from US and EU led imperialist centres. The intellectual inputs and policy prescriptions pertaining to GST intended to achieve “ease of doing business” and “investor-friendly” atmosphere in India by transforming it into a unified market violating the federal structure are invented by coordinated work of several neocolonial-neoliberal institutions like OECD, IMF, World Bank, WTO, UNDP and such other international consulting agencies like Price Waterhouse Coopers, KPMG, Deloitte, Crimson& Co., along with NGO networks like Tax Inspectors Without Borders (TIWB), Forum on Tax Administration (FTA), etc. With imperialist agencies directly controlling country’s economic policy-making, compradorism of the Indian state has crossed all bounds under Modi. While these lines are written, people in different parts of the country are rising up against Modi’s arbitrary imposition of the highest GST rates in the world. As the government has totally withdrawn from the market, reins of the economy is now with the most corrupt corporate hoarders, black marketers and MNCs who are marking up the prices of all essential items, necessaries, medicines and that of all essential services cutting across state boarders. The GST Council and GSTN (registered as a non-governmental private limited company under which around 60000 computer experts are working overtime) in whom the policy decisions pertaining to GST vest is a supra-parliamentary body controlled by new generation banks and corporate financiers where the elected representatives have no say. The GST Council is arbitrarily fixing GST rates on the prices of goods and services decided by corporate giants. As in the case of demonetization, in the case of GST too, the Modi government has effectively sidelined the ‘sovereign’ parliament which of late is no more than a spectator. No doubt, while the entire parliamentary opposition including the CPI (M) is groping in the dark, everywhere it is the common people who are coming to the streets against this fascistic offensive of centralizing economic power with the Hindutva regime. It is the utter ideological bankruptcy of the CPI (M) that is coming out in the open now. It is known to all that, even when Congress chief ministers were standing aghast as Manmohan Singh launched neoliberalism systematically demolishing the foundations of Nehruvian state-led development path in the early nineties, it was none other than Jyoti Basu who in his celebrated speech in London School of Economics welcomed globalization, depicting it as a “reality.” And in 1996, when the Congress lost power, both Indian and international ruling classes reciprocated by offering India’s prime minister-ship to Basu. When the so called ‘second generation’ of globalization gathered momentum under Vajpayee, the latter was constantly in touch with Bengal chief minister Basu and this led to the nomination of Asim Dasgupta, finance minister of WB as the chairman of the Empowered Committee of finance ministers and he remained as the decade-long architect in charge of preparing the logistics essential for rolling out GST in India. And when the Modi-Jaitely combine came to power in 2014, much of the groundwork was already done. Meanwhile, as a mark of CPI(M)’s consistent support to GST, the LDF govt. led by it that came to power in Kerala in mid 2016 declared its whole-hearted support to Modi for shouldering the task of GST roll-out. No wonder, Kerala chief minister Pinarayi is seeking economic advice from the same Harvard source whom Modi govt. is also consulting. When these are the facts, and when it did not oppose the adoption of GST in parliament or when it had to be endorsed by the state govts., coming out with an article in 23rd July issue of its organ, People’s Democracy, criticizing it as the biggest neoliberal attack on the people is nothing but double talk, an effort to pacify its supporters ho are realizing GST’s evil features day by day. To be precise, in the ultimate analysis, like demonetization, GST also aims at corporate concentra-tion of economic power in the centralized Hindu supremacist state demolishing the federal structure. Both attempts to deprive the vast majority of working and toiling people of their meagre earnings through an IT-based framework that ensures horrific levels of wealth concentration in the most corrupt corporate class. An all-out offensive from the progressive democratic forces with a clear political program against neoliberal policies is the only alternative.